Financial Services

An Expert's View about Banking, Finance and Insurance in Mexico

Posted on: 25 Aug 2012

After 2010, Mexico has had a stable financial performance due to sound management of public finances and taxation reforms.

Financial Services in Mexico After 2010, Mexico has had a stable financial performance due to sound management of public finances and taxation reforms. Strategic geographical position and a network of trade agreements provide Mexico direct access to the USA, the world's largest market and to more than one billion consumers on several continents. It also has young and trained population, focused on the skills that Mexico needs to continue developing in the future. Market overview Mexico has the second largest economy in Latin America and according to a study conducted by Goldman Sachs, it may become the 5th largest economy in the world by 2050. For Financial Services there are six main business niche areas: ξ Public Private Partnerships ξ Listings (stock markets) ξ Arbitration (Legal services) ξ International Finance Reporting Standards (IFRS) ξ Insurance/Reinsurance ξ Private Equity Funds Key opportunities Public Private Partnerships The National Infrastructure Plan includes a number of infrastructure projects. The Mexican Government aims to use the PPP method to increase access to public services, particularly in healthcare, education and roads. UKTI Mexico has been heavily involved in the organisation of important visits to the UK from Mexican State governments to push further the introduction of PPP's. Some State Governments have already made important legal reforms in favour of PPP's. Mexican firms and Government Institutions are keen to associate with (principally) UK firms with the relevant experience. In addition, UKTI Mexico works closely with a number of UK Financial Services Associations who can inform UK firms on the development of the Mexican projects. Some of the most important Infrastructure projects are: ξ The modernisation and/or refurbishment of the transversal and longitudinal road work that connects the country's main cities, with small towns, ports, borders and tourists centres. ξ Developing hospitals, cultural centres, prisons and water projects. ξ The Mexico City Govenrment has planned for eight new PPP’s projects with an investment of £2822 million. These projects are: a couple of new intercity highways, a street car project for Mexico City’s historic down town area, a third line for the Mexico City underground and two high security prisons. LISTINGS Several Mexican companies doing business internationally are reaching the point where they need capital to grow and carry out their expansion plans. As they introduce professional management, they are starting to meet international accountability and transparency requirements to list in New York. London offers an attractive alternative with the London Stock Exchange and Alternative Investment Market (AIM). In May 2008, a well-known mining company, Peñoles announced it would list its gold and silver operations on the London Stock Exchange. Fresnillo plc, the world's largest primary producer of silver has now achieved a successful flotation. ( During an LSE visit to Mexico in January 2012, the Head of the Americas met possible Mexican candidates to list at Main. The Lord Mayor will visit Mexico in October 2012 and a listing event will be coordinated around this visit. ARBITRATION Legal services, and in particular arbitration, is relevant in Mexican business due to the significant number of companies developing international business. Currently there are several local law firms partnered with international law firms, who are keen to promote London as the top arbitration centre in the world. IFRS By 2011-2012 all companies in Mexico will have to prepare and produce all of their financial statements under IFRS. The UK Accountancy sub-sector is a pioneer on IFRS. ξ At present, the universities offering post-graduate degrees on IFRS are ITAM, and Tecnologico de Monterrey). ξ In October 2011, the Mexican Institute of Public Accountants signed an MoU with the ICAEW. Also IA Seminars and Baker Tilly Mexico (the only UK accountancy firm established in Mexico) and are currently working together. INSURANCE/REINSURANCE Two British insurance companies are presently operating successfully in Mexico. Royal Sun Alliance (RSA, mainly in life, property and damages) and BUPA (health). Mexico has become the most important reinsurance market in Latin America for Lloyd’s of London. Private Equity Funds The Private Equity market in Mexico is more mature. Currently there are 50 Funds which had $1,071 million USD invested in 2010. The average per fund in 2010 was $41 million; with around $8 billion USD accumulated investment. ξ There are good opportunities for British Limited Partners (LP’s) ξ General Partners (GP’s) established in Mexico have shown interest in partnering with British GP’s. Latest export opportunities – Financial & Professional Services Latest export opportunities - Mexico Getting into the market Key entry points into the Mexican Financial Services market is for UK to find local partners or end users. Mexican companies and decision makers usually enjoy having initial face to face negotiations to know their potential partners. Therefore, it is best when UK companies have one-on-one meetings with sector players because they can obtain further information. More about doing business in Mexico Contacts Market intelligence is critical when doing business overseas, and UKTI can provide bespoke market research and support during overseas visits though our chargeable Overseas Market Introduction Service (OMIS). To commission research or for general advice about the market, get in touch with our specialists in country - or contact your local international trade team. Fernando Estandia UK Trade and Investment – Head of Financial Services T:+52 55 1670 3207 Gisela Gonzalez Flores UK Trade and Investment Officer T:+52 55 1670 3206 Contact your local international trade team UKTI Events UKTI runs a range of events for exporters, including seminars in the UK, trade missions to overseas markets and support for attendance at overseas trade shows. Visit of the Lord Mayor of London to Mexico City and Monterrey Dates: (TBC) October 2012 Latest events – Financial & Professional Services Latest events – Mexico Useful links More about OMIS and other UKTI services for exporters
Posted: 25 August 2012

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